Lizzy Magie, inventor of the Landlord’s Game, which we now know as Monopoly, in 1936.
Photograph: Anspach Archives

One night in late 1932, a Philadelphia businessman named Charles Todd and his wife, Olive, introduced their friends Charles and Esther Darrow to a real-estate board game they had recently learned. As the two couples sat around the board, enthusiastically rolling the dice, buying up properties and moving their tokens around, the Todds were pleased to note that the Darrows liked the game. In fact, they were so taken with it that Charles Todd made them a set of their own, and began teaching them some of the more advanced rules. The game didn’t have an official name: it wasn’t sold in a box, but passed from friend to friend. But everybody called it ‘the monopoly game’.

Together with other friends, they played many times. One day, despite all of his exposure to the game, Darrow – who was unemployed, and desperate for money to support his family – asked Charles Todd for a written copy of the rules. Todd was slightly perplexed, as he had never written them up. Nor did it appear that written rules existed elsewhere.

In fact, the rules to the game had been invented in Washington DC in 1903 by a bold, progressive woman named Elizabeth Magie. But her place in the game’s folk history was lost for decades and ceded to the man who had picked it up at his friend’s house: Charles Darrow. Today, Magie’s story can be told in full. But even though much of the story has been around for 40 years, the Charles Darrow myth persists as an inspirational parable of American innovation – thanks in no small part to Monopoly’s publisher and the man himself. After he sold a version of the game to Parker Brothers and it became a phenomenal success, eventually making him millions, one journalist after another asked him how he had managed to invent Monopoly out of thin air – a seeming sleight of hand that had brought joy into so many households. “It’s a freak,” Darrow told the Germantown Bulletin, a Philadelphia paper. “Entirely unexpected and illogical.”

Magie’s original board design for the Landlord’s Game, which she patented in 1903. Photograph: United States Patent and Trademark Office

To Elizabeth Magie, known to her friends as Lizzie, the problems of the new century were so vast, the income inequalities so massive and the monopolists so mighty that it seemed impossible that an unknown woman working as a stenographer stood a chance at easing society’s ills with something as trivial as a board game. But she had to try.

Night after night, after her work at her office was done, Lizzie sat in her home, drawing and redrawing, thinking and rethinking. It was the early 1900s, and she wanted her board game to reflect her progressive political views – that was the whole point of it.

The descendant of Scottish immigrants, Lizzie had pale skin, a strong jawline and a strong work ethic. She was then unmarried, unusual for a woman of her age at the time. Even more unusual, however, was the fact that she was the head of her household. Completely on her own, she had saved up for and bought her home, along with several acres of property.

She lived in Prince George’s county, a Washington DC neighbourhood where the residents on her block included a dairyman, a peddler who identified himself as a “huckster”, a sailor, a carpenter and a musician. Lizzie shared her house with a male actor who paid rent, and a black female servant. She was also intensely political, teaching classes about her political beliefs in the evenings after work. But she wasn’t reaching enough people. She needed a new medium – something more interactive and creative.

There was one obvious outlet. At the turn of the 20th century, board games were becoming increasingly commonplace in middle-class homes. In addition, more and more inventors were discovering that the games were not just a pastime but also a means of communication. And so Lizzie set to work.

She began speaking in public about a new concept of hers, which she called the Landlord’s Game. “It is a practical demonstration of the present system of land-grabbing with all its usual outcomes and consequences,” she wrote in a political magazine. “It might well have been called the ‘Game of Life’, as it contains all the elements of success and failure in the real world, and the object is the same as the human race in general seem[s] to have, ie, the accumulation of wealth.”

Lizzie’s game featured play money and deeds and properties that could be bought and sold. Players borrowed money, either from the bank or from each other, and they had to pay taxes. And it featured a path that allowed players to circle the board – in contrast to the linear-path design used by many games at the time. In one corner were the Poor House and the Public Park, and across the board was the Jail. Another corner contained an image of the globe and an homage to Lizzie’s political hero, the economist Henry George, whose ideas about putting the burden of taxation on wealthy landowners inspired the game: “Labor upon Mother Earth Produces Wages.” Also included on the board were three words that have endured for more than a century after Lizzie scrawled them there: GO TO JAIL.

Lizzie drew nine rectangular spaces along the edges of the board between each set of corners. In the centre of each nine-space grouping was a railroad, with spaces for rent or sale on either side. Absolute Necessity rectangles offered goods like bread and shelter, and Franchise spaces offered services such as water and light. As gamers made their way around the board, they performed labour and earned wages. Every time players passed the Mother Earth space, they were “supposed to have performed so much labor upon Mother Earth” that they received $100 in wages. Players who ran out of money were sent to the Poor House.

Players who trespassed on land were sent to Jail, and there the unfortunate individuals had to linger until serving out their time or paying a $50 fine. Serving out their time meant waiting until they threw a double. “The rallying and chaffing of the others when one player finds himself an inmate of the jail, and the expressions of mock sympathy and condolence when one is obliged to betake himself to the poor house, make a large part of the fun and merriment of the game,” Lizzie said.

From its inception, the Landlord’s Game aimed to seize on the natural human instinct to compete. And, somewhat surprisingly, Lizzie created two sets of rules: an anti-monopolist set in which all were rewarded when wealth was created, and a monopolist set in which the goal was to create monopolies and crush opponents. Her vision was an embrace of dualism and contained a contradiction within itself, a tension trying to be resolved between opposing philosophies. However, and of course unbeknownst to Lizzie at the time, it was the monopolist rules that would later capture the public’s imagination.

After years of tinkering, writing and pondering her new creation, Lizzie entered the US Patent Office on 23 March 1903 to secure her legal claim to the Landlord’s Game. At least two years later, she published a version of the game through the Economic Game Company, a New York–based firm that counted Lizzie as a part-owner. The game became popular with leftwing intellectuals and on college campuses, and that popularity spread throughout the next three decades; it eventually caught on with a community of Quakers in Atlantic City, who customised it with the names of local neighbourhoods, and from there it found its way to Charles Darrow.

In total, the game that Darrow brought to Parker Brothers has now sold hundreds of millions copies worldwide, and he received royalties throughout his life.

Lizzy Magie’s place in the game’s folk history was lost for decades and ceded to the man who had picked it up at his friend’s house – Charles Darrow. Photograph: AP

Lizzie was paid by Parker Brothers, too. When the game started to take off in the mid-1930s, the company bought up the rights to other related games to preserve its territory. For the patent to the Landlord’s Game and two other game ideas, Lizzie reportedly received $500 — and no royalties.

At first, Lizzie did not suspect the true motives for the purchase of her game. When a prototype of Parker Brothers’ version of the Landlord’s Game arrived at her home in Arlington, she was delighted. In a letter to Foster Parker, nephew of George and the company’s treasurer, she wrote that there had been “a song in my heart” ever since the game had arrived. “Some day, I hope,” she went on, “you will publish other games of mine, but I don’t think any one of them will be as much trouble to you or as important to me as this one, and I’m sure I wouldn’t make so much fuss over them.”

Eventually, though, the truth dawned on her – and she became publicly angry. In January of 1936 she gave interviews to the Washington Post and the Washington Evening Star. In a picture accompanying the Evening Star piece, she held up game boards from the Landlord’s Game and another game that had the word MONOPOLY written across its center four times in bold black letters; on the table in front of her was the now-familiar “Darrow” board, fresh out of the Parker Brothers box. The image of Lizzie painted by the reporter couldn’t have been clearer. She was angry, hurt and in search of revenge against a company that she felt had stolen her now-best-selling idea. Parker Brothers might have the rights to her 1924-patented Landlord’s Game, but they didn’t tell the story of her game invention dating back to 1904 or that the game had been in the public domain for decades. She had invented the game, and she could prove it.

The Evening Star reporter wrote that Lizzie’s game “did not get the popular hold it has today. It took Charles B Darrow, a Philadelphia engineer, who retrieved the game from the oblivion of the Patent Office and dressed it up a bit, to get it going. Last August a large firm manufacturing games took over his improvements. In November, Mrs Phillips [Magie, who had by now married] sold the company her patent rights.

“It went over with a bang. But not for Mrs Phillips … Probably, if one counts the lawyers’, printers’ and Patent Office fees used up in developing it, the game has cost her more than she made from it.” As she told the Washington Post in a story that ran the same day: “There is nothing new under the sun.”

It was to little avail. Much to Lizzie’s dismay, the other two games that she invented for Parker Brothers, King’s Men and Bargain Day, received little publicity and faded into board-game obscurity. The newer, Parker Brothers version of the Landlord’s Game appeared to have done so as well. And so did Lizzie Magie. She died in 1948, a widow with no children, whose obituary and headstone made no mention of her game invention. One of her last jobs was at the US Office of Education, where her colleagues knew her only as an elderly typist who talked about inventing games.

As Charles Darrow reaped the rewards of the game’s success, Lizzie Magie’s role in the invention of Monopoly remained obscure. But in 1973, Ralph Anspach, a leftwing academic who was under legal attack from Parker Brothers over his creation of an Anti-Monopoly game, learned her story as he researched his case, seeking to undermine the company’s hold on the intellectual property. The case lasted a decade, but in the end, Anspach prevailed, in the process putting Magie’s vital role in the game’s history beyond dispute – and building up an extraordinary archive of material, which forms the backbone of this account.

But Hasbro, the company of which Parker Brothers is now a subsidiary, still downplays Magie’s status, responding to a request for comment with a terse statement: “Hasbro credits the official Monopoly game produced and played today to Charles Darrow.” And even in 2015, on Hasbro’s website, a timeline of the game’s history begins in 1935. Over the years, the carefully worded corporate retellings have been most illuminating in what they don’t mention: Lizzie Magie, the Quakers, the dozens, if not hundreds or thousands, of early players, Ralph Anspach and the Anti-Monopoly litigation. Perhaps the care and keeping of secrets, as well as truths, can define us.

And so the beloved Darrow legend lives on. It only makes sense. The Darrow myth is a “nice, clean, well-structured example of the Eureka School of American industrial legend,” the New Yorker’s Calvin Trillin wrote in 1978. “If Darrow invented the story rather than the game, he may still deserve to have a plaque on the Boardwalk honoring his ingenuity.” It’s hard not to wonder how many other unearthed histories are still out there –stories belonging to lost Lizzie Magies who quietly chip away at creating pieces of the world, their contributions so seamless that few of us ever stop to think about their origins. Commonly held beliefs don’t always stand up to scrutiny, but perhaps the real question is why we cling to them in the first place, failing to question their veracity and ignoring contradicting realities once they surface.

Above all, the Monopoly case opens the question of who should get credit for an invention, and how. Most people know about the Wright brothers – who filed their patent on the same day as Lizzie Magie – but don’t recall the other aviators who also sought to fly. The adage that success has many fathers, but we remember only one, rings true – to say nothing of success’s mothers. Everyone who has ever played Monopoly, even today, has added to its remarkable endurance and, on some level, made it their own. Games aren’t just relics of their makers – their history is also told through their players. And like Lizzie’s original innovative board, circular and never-ending, the balance between winners and losers is constantly in flux.

• This is an edited extract from The Monopolists: Obsession, Fury, and the Scandal Behind the World’s Favorite Board Game by Mary Pilon (Bloomsbury, £20). Buy it for £16 at bookshop.theguardian.com